Shell Settles with Mongolian Firm

Mongolia explorer Petro Matad said February 1 that all contractual and regulatory requirements in relation to Shell's exit from Blocks IV and V in Mongolia have been completed and that Shell has officially exited from the blocks.

Petro Matad has therefore confirmed that it now holds 100% of Blocks IV and V.  Receipt of the contractually agreed $5mn final settlement amount as per conditions announced by Petro Matad on August 5 2016 was received February 1 from Shell, added Petro Matad. 

BG acquired a 78% interest in the two blocks in April 2015 in return for paying AIM-listed Petro Matad's share of an agreed $28mn work programme plus $4.5mn cash. Three months after Shell's February 2016 takeover of BG, Shell announced its intention of relinquishing the interest.

In preparation for its drilling programme on blocks IV and V expected to commence in mid-2017, Petro Matad last week issued a tender for a drilling rig and related services. It received an initial $10mn payment from Shell in 2016. Including the latest $5mn payment, Petro Matad's current cash balance is $11mn. The initial eight-year terms for Blocks IV and V expire on July 29 2017 but the company is confident of securing an extension ahead of the start of drilling. As such, it says it continues to seek a farmout partner and says interest has been shown in a potential farm into blocks IV, V and XX.

The company has not indicated if the exploration is directed at oil or gas.

Mark Smedley